Category: Ecosystems

Some thoughts on “Measure What Matters”

Business goals are a dangerous animal.

On the one hand necessary for top performance, on the other can lead to increased risk taking, narrow focus, unethical behaviour.

I already blogged about the OKR system employed initially by fast-growth tech companies which implemented it to have a meaningful goal setting process and increase transparency. In that sense reading “Measure what matters” by John Doerr added a whole new dimension to my understanding and linked theory with some real-life examples and learnings.

I have put toghether my take aways in the hope that they can help others in implementing OKRs. I strongly recommend that you read the book as it is by far the best I could find on the topic.

OKR requires commitment and time

  • OKRs are a tool, not a weapon – do not use them to force on people.
  • Dare to fail – won’t work out in the beginning and probably never gonna be perfect.
  • Be patient: it takes at least some quarters to get it going.

Implementing OKR the right way

  • Ask the question: what is most important for the next 3 months, where should we concentrate our efforts?
  • Set hard goals as they drive performance more effectively than easy ones. Specific hard goals yield better output than easy ones.
  • Less is more – better have a few but well chosen objectives.
  • Set goals from the bottom up – about half of the goals should come from employees.
  • Collective agreement is essential for getting buy-in from colleagues and subordinates as no dictating is allowed.
  • An OKR can be modified or scrapped at any point in time, sometimes it takes months in the process until the right key results are identified.
  • Pairing OKRs – pairing quantity and quality results in getting key results better aligned with value creation e.g. Sales of 50M + Maintenance contracts of 10M.
  • OKR for new features could be tied to a deadline till data is available and results can be quantified.
  • Having cascading in OKRs allow employees to see the objectives up to the top management and clarifies how the objectives of employees down the hierarchy contribute to the mission of the business.
  • Implementing OKRS requires the whole organization to participate – no opt-outs are allowed. In order to ensure that one or two shepherds can be designated (e.g. for some years this task at Google was done by its SVP Jonathan Rosenberg).
  • Commited vs. aspirational goals – committed are generally goals such as revenue, users, bookings that are to be achieved in full. Aspirational are on the other side dare and future looking but with a high risk of failure.

OKR alone is not enough, you also need CFR

The introduction of OKR requires a change in HR practices where annual reviews are the standard. The alternative to annual reviews is called continuous performance management. Its tool is CFR – Conversations, Feedback, Recognition.

  • Conversations stands for regular and open exchanges between a manager and contributor.
  • Feedback: provided among peers in order to track progress and future improvements
  • Recognition: is given in 1:1 to deserving individuals for  their contribution

Interesting point around CFR is that it is decoupled from compensation unlike with annual reviews (for most companies).

CFR foresees a semiannual professional development conversation where discussion is around career trajectory.

In sum, the old practice which still rules in many companies sees goals, compensation and performance management to be tightly intertwined. The new model engages a different view, namely that 1) OKR, 2) CFR and 3) Compensation & Evaluation are separate areas with a bit of overlap.

“Culture eats strategy for breakfast”

Once said … Peter Drucker.

You get leaps in productivity when stretch for amazing. A typical example is the Google’s 10x rule whereas incremental OKRs are being replaced with exponential ones.

OKRs are usually marked with red (behind plan), green (going well) and yellow (somewhere in between). Companies often have particular strategies how to deal with tracking OKRs. They remove the yellow/orange and mark the ones in danger as red. At OKR reviews they concentrate only on the reds and discuss which objective is most important therefore should get extra attention and eventually resources. This is known as „selling the reds“.

This is what a typical OKR cycle looks like

  • Define annual OKRs and Q1 e.g start in November practically several weeks ahead of Q1.
  • Announce company-wide OKRs for the year and Q1 and e.g. mid-December.
  • Announce team Q1 OKRs – the team develops their own OKRs and shares them in meetings e.g. at the beginning of January.
  • Provide employee Q1 OKRs e.g. end of first week of January.
  • As the quarter goes, OKRs are being tracked and toward end of Q1 also being scored. In the mean time about 6 weeks before next quarter starts the brainstorming of company-wide OKRs for Q2 and the cycle repeats.

If you want to get systematized and proven guide into the world of OKRs I cannot emphasize enough the importance of laying your hands on “Measure what matters” by John Doerr. I consider it a must have in every library and will be happy to hear some funny stories from your experience.

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When is the last time you reflected on motivation and how to build lasting perfomance in your team?

Over the last years I have repeatedly encountered 3 words defining the current notion for motivation: 1. Autonomy, 2. Mastery, 3. Purpose. This notion has often appeared in presentations about tech culture, notably at Zalando (thanks Eric Bowman) but also often emerges in company cultures such as the one at Solvemate (thanks Christian Blomberg).

So I carried the notion with me till I felt urgency to go beyound the simple words. Ultimately I landed at presumably the source of it: the book “Drive” by Daniel Pink.

Without telling you too much and spoiling the read here are some of my takeaways for motivation:

  • Motivation 2.0 in the form of carrot and stick (rewards based) is inefficient and unpredicatable.
  • Motivation 3.0 defined by the 3 aforementioned words offers the ruleset for maintaining performance and job satisfaction of a present day person.
    • Meaning of Autonomy – to hold your life/job with your hands and direct it the way you deem necessary.
    • Meaning of Mastery – to constantly learn and improve on a subject that matters.
    • Meaning of Purpose – to dedicate to something bigger than our own self.
  • Motivation 3.0 seems to almost always outeprform Motivation 2.0. Even in the short term.
  • FedEx days at Atlassian. Nowadays called ShipIt this is a day long retreat for evey engineer in the company to create a new solution or fix something that annoys them. Execution matters but best idea wins.
  • The concept of ROWE – results only work environment, or else said no time keeping (check in/out).
  • Super clear and stripped down to the basics insights from Jim Collins (by the way also a great author) about self-motivation – 4 simple rules how to instigate such culture.

On the matter of ROWE quite curious how many companies run this model, it seems to be getting good traction in creative industries. Yet, wondering whether teams do not alienated by not spending time together.

Anyway, I highly recommend this book and plan to revert to it from time to time. Have you read it and what do you think?

PUBLISHED ON Posted on in Categories Ecosystems, Mentoring, News, Productivity, Random Thoughts, Stark Founders, Technology
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The seven truths of innovation for Lego

This post is about Lego and how it reinvigorated its growth.

As a child I loved Lego. But I had none. Back then it was prohibitively expensive.

So I watched the shiny bricks and structures through the shopwindow. I actually doubted kids played with them, i thought nobody can afford them.

Funny enough Lego indeed got in trouble – but it had nothing to do with my post-communist low-income motherland. Instead in the late 90s kids were no longer fascinated with their products – it was the time of video games and a new wave of electronic toys.

This meant that Lego had to reinvent itself. So the iconic toy company rolled its sleeves to define a unique formula for creating new products and services.

David Robertson put it altogether in his book “Brick by Brick: How LEGO Rewrote the Rules of Innovation and Conquered the Global Toy Industry”. He summarized the seven truths of Lego innovation as follows:

  • “Hire diverse and creative people.”
  • “Head for blue-ocean markets.”
  • “Be customer driven.”
  • “Practice disruptive innovation.”
  • “Foster open innovation – heed the wisdom of the crowd.”
  • “Explore the full spectrum of innovation.”
  • “Build an innovation culture.”

Nothing more to say, just let it sink. And for those who want to read the book, here is the full story.

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The perfect storm in transportation is near and … not just there

 

Not a big fan of breaking headlines but certain technology highlights in the last years are starting to connect better then ever before. And it seems that visionaries and industry finally start to agree. We are witnessing major trends that will re-shape whole industries in a shorter period that we have ever experienced before.

I am pointing at trends in transportation such as::

  • Carsharing
  • Electric vehicles
  • Autonomous driving
  • Machine learning

Carsharing has taken the market by surprise and is becoming more popular by the day. European providers like DriveNow and Car2Go address the daily transportation needs in the city while Drivy, Croove and SnappCar are taking a share from traditional car rental by using privately owned cars. These companies effectively reduce the number of cars on the streets, remove the burden of car maintenance and undermine the desire to invest 30K+ in buying a car. The idea is so good that carsharing is being eyed by established players such as EasyGroup, the company tasked to expand the EasyJet empire, or Europcar, the 2nd biggest European car rental company (via its investment arm).

Takeaway: expect less cars on the streets in the long term, less car sales and revenue from spare parts for car manufacturers.

Electric cars are around us and whoever has tried the i series BMW or Tesla, knows the driving experience if not better is at least at par with current cars. And the acceleration is unbeatable so I am definitely in :). But more importantly electric cars are simple, they have 18x less moving parts than a combustion engine car and thus need close to zero maintenance. And even if needed, I am in no doubt repairs will be done by a robot in the very near term. A major concern before, recharging, is becoming significantly less of a concern with battery life getting longer and charging stations growing in numbers.

The advantages of electric cars and wide acceptance of the public are being unmistakably recognised by car makers such as Daimler which recently announced its own Gigafactory. It came as a result of the acceleration of its electric car plans and backed by $11 bn. KUDOs should go also to Tesla which has pushed the whole car maker industry to move faster and bolder.

Takeaway: expect less demand for oil and gas, increasing uncertainty for energy companies, less revenue from spare parts for car manufacturers, job losses in car maintenance.

Autonomous driving and machine learning are no longer an innovation. Self driving cars are around us, make total sense and are here to stay. Machine learning as one of the ingredients of autonomous driving is being adopted so fast that it will soon be considered a commodity.  Autonomous driving makes our roads safer, eases traffic and saves us tons of time. It is good not only for private use but also in public transport and moving goods. There are already autonomous driving luxury cars and truck trains on our highways but have you thought about autonomous driving buses? Because it won’t be long before you find yourself on one of those.

Takeaway: expect job losses in transportation e.g. professional drivers, even greater increase in efficiency in transportation and car sharing, further reduction of vehicles on the streets.

So what would our life look like in less than 10 years? I think something like this.

The rosy part: Commute in cities either by car, bus or rail will be driverless. Most vehicles will be electric. Very few people will own a car. The fee from A to B will vary based on provider, vehicle brand, transportation experience e.g. the latest interior and entertainment Audi concept. It might even happen that cities abandon public transport and outsource it to private providers that offer autonomous fleets on demand. These fleets might well optimise the routes so that they do not follow a predefined route but drive commuters to their door.

Car manufactures will become vertically integrated fleet manufacturers and managers. New type of vehicles will emerge, many models will become obsolete and will be abandoned.

Technology providers like Google, Uber and other technology-first giants will enter the transportation sector, and will have an edge on autonomous driving technology over car manufacturers.

The not so rosy part: Professional drivers, mechanics, petrol station workers will become obsolete. Smaller car manufacturers will fight for survival, some brands might disappear. Garages will disappear. Energy companies will be seriously hit from lower than expected demand for oil and gas as well as investments in oil and gas exploration.

And to ease a bit my apocalyptic predictions, stay tuned for the next blog post about my exciting experience at the Founders Hack event in the city of Bielefeld.

PUBLISHED ON Posted on in Categories Ecosystems, Random Thoughts, Technology
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The Netflix culture – a myth or a must for company growth and sustainability

This time my topic is around company culture and in particular the culture of Netflix. Also big apologies to those expecting my next post on blockchain, please have some more patience, it is almost there, and I just could not hold on to share this Netflix jewel.

My personal experience and believe is that culture does not come from senior management or below but is set by the founders and the CEO (if not the same). In that respect, Reed Hastings, CEO of Netflix, gave a stunning example on culture and leadership by putting it altogether in a not so short presentation (you will find it below). He published the actual presentation in August 2009 when most of us were worried about the financial meltdown and existential topics. May be this is why it took so long for people to actively talk about it (or maybe it is just my humble me noticing it just now).

Reed Hastings made it clear that instead of nice sounding values (and often fake ones), he has designed the actual ones for his company. And so that there is not too much interpretation involved, he added plenty of examples :-).

“The actual company values, as opposed to the nice-sounding values, are shown by who gets rewarded, promoted, or let go.”

Takeaway I: The nine Netflix values are as follows:

  • Judgement
  • Communication
  • Impact
  • Curiosity
  • Innovation
  • Courage
  • Passion
  • Honesty
  • Selflessness

Reed has explained pretty well what each one means so please take a look in the deck, below you will find just my own takes coupled with a bit of commentary.

Reed Hasting’s Netflix Culture 2001

For me values such as Judgement and Communication point towards resolving the plague of each business – employees NOT being empowered to make decisions and communication flowing efficiently. But there is a catch – this of course is only possible if the people in place are AAA professionals. Else said (Takeaway II):

“Great workplace is stunning colleagues”

and

“Unlike many companies, we practice: adequate performance gets generous severance package”

and

“We are a team, not a family – we are like a prosports team, not a kid’s recreational team”

Takeaway III: Reed also references to The Keeper Test manager case. This is something I have vaguely practiced but never managed to summarise it so crisp: if somebody tells you he/she will leave, are you going to fight hard to keep the person?

At Netflix internal attitude such as “cutthroat” or “sink or swim” are not tolerated. Yet, this can apply only for a AAA team that will tolerate fast learners or otherwise

“Sustained B-level performance, despite “A for effort”, generates a generous severance package, with respect”

“Sustained A-level performance, despite minimal effort, is rewarded with more responsibility and great pay.”

The focus on high performance comes on a seemingly scientific measure:

“In procedural work, the best are 2x better than the average.”

“In creative/inventive work, the best are 10x better than the average.”

Takeaway IV: The Rare responsible person – yet another ingenious concept. Reed is referencing to the rare type of attitude towards self improvement, self motivation and that can even be spurred in people that pick someone else’s trash in the office and throw it away.

Takeaway V: When company grows, it often fails to add proportionately top talent to its workforce. Sometimes I even believe managers are afraid to surround themselves with top people and see them as a threat. The solution – grow talent density faster than complexity. In other words outgrow complexity created by growth by hiring top talent at a faster rate than the growth itself (as much as you can).

Takeaway VI: Netflix is not in a safety-critical market such as running nuclear plants so it rather focuses on rapid recovery. This for me translates quite clearly to the Facebook’s Motto

Move Fast and Break Things

But at Netflix, also Fix fast. 🙂

Takeaway VII: Another interesting point is the Netflix approach to working hours and vacation: No 9am to 5pm work policy, no vacation policy. Practically no tracking, yet people are actively encouraged to take generous retreats and come back with fresh ideas. And on top

“Career “Planning” Not for Us”

Netflix has dismissed formalised planning including mentor assignments, rotations, multi year career paths.

“High performance people are generally self-improving through experience, observation, introspection, reading, and discussion.”

Takeaway VIII: Managing through context

High performance people will do better work if they understand the context. Highly Aligned, loosely coupled … approach for corporate team work.

and

Investing in context means – frequent department meetings, being open about strategies and results.

Takeaway IX: (Last one 🙂 Always pay top of the market and do not connect payment with the well being of the company as times change but you can be successful only with top talent.

payment is aligned with what the market pays and what would cost to replace such a person.

and

… side effect is that rarely there will be a higher offer if somebody wants to leave.

and

it is tolerable to talk to other companies and then talk to your supervisor about your actual market value

This is all from me for today. Hope enjoyed the read and I will follow up soon with my next article.

P.S. All citations above are courtesy of Reed Hastings.
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